Legislature(2015 - 2016)BARNES 124
03/26/2015 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB149 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 149 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | HB 118 | TELECONFERENCED | |
HB 149-NATIVE CORP. ART. AMENDMENTS
9:16:32 AM
VICE CHAIR SEATON announced that the final order of business
would be HOUSE BILL NO. 149, "An Act relating to an amendment of
the articles of incorporation of certain Native corporations to
establish a lower quorum requirement for shareholder meetings."
9:16:48 AM
REPRESENTATIVE LANCE PRUITT, Alaska State Legislature, speaking
as the sponsor of HB 149, informed the committee that HB 149 was
introduced at the request of the Native corporations in Alaska.
He explained that a two-thirds vote of the corporation members
in the affirmative is required to change the articles of
incorporation for corporations formed prior to 1989, which is
the case for most of the Alaska Native corporations. However, a
vote of 50 percent in the affirmative is required to change the
articles of incorporation for those corporations formed after
1989. Further, current statute includes a provision that allows
a quorum requirement to be as low as one-third. Over the course
of the last 40 years, Alaska Native corporations have
experienced an increase in the number shareholders as newer and
younger shareholders have joined while at the same time there
has been a demographic shift of individuals leaving the villages
and even Alaska such that they aren't able to attend annual
corporation meetings. Therefore, there has been a decrease in
the numbers of a quorum. He clarified that currently the Alaska
Native corporations are meeting quorum requirements, but they
recognize the aforementioned trends and want to address it
before it becomes a problem. However, the Alaska Native
corporations feel that there's virtually no way they can meet
the two-thirds requirement to amend the articles of
incorporation. The aforementioned is why the Alaska Native
corporations have requested changing the articles of
incorporation vote requirement to 50 percent so that they can
reduce the quorum requirement for a meeting to one-third [of the
shareholders entitled to vote at a meeting].
9:20:35 AM
REPRESENTATIVE NAGEAK, speaking as a shareholder of an Alaska
Native corporation, related that he has observed the
difficulties of obtaining a quorum first hand. Therefore, he
viewed HB 149 as an opportunity to adjust the quorum
requirements.
9:21:29 AM
VICE CHAIR SEATON opened public testimony.
9:21:56 AM
NICHOLA RUEDY, Director, Alaska Native Village Corporation
Association (ANVCA), began by informing the committee that ANVCA
is a nonprofit organization with a mission to provide services
that will improve the efficiency, profitability, and stability
of its member village corporations to provide a network of
support and technical assistance. Currently, 60 village
corporations belong to ANVCA. The ANVCA membership is comprised
of representatives from the village corporations, which work
collaboratively on issues they have in common to contribute to
the future health of these groups by sharing knowledge and
resources. Ms. Ruedy then related support for HB 149 as it
could be used as a tool to change the quorum requirements for
village corporations, which also face similar challenges as
regional corporations in terms of voter turnout. In response to
Vice Chair Seaton, Ms. Ruedy explained that the village CEOs
didn't pass a resolution on this matter, but the board voted to
support this issue. The board, which is comprised of nine board
members all of which are CEOs of village corporations, voted
unanimously to support HB 149.
9:23:53 AM
VICE CHAIR SEATON mentioned that it would be helpful to have a
written statement from ANVCA to include in the bill packet.
9:24:27 AM
KIM REITMEIER, President, ANCSA Regional Association, informed
the committee that the mission of the ANCSA Regional Association
is to promote and foster the continued growth and economic
strength of the Alaska Native Regional Corporations on behalf of
the shareholders. She explained that the ANCSA Regional
Association represents the chief executive officer of the 12
land-based regional Alaska Native corporations as well as the
president of the Alaska Federation of Natives (AFN). Alaska
Native corporations are owned by 116,000 Alaska Native people
and when measured against the top 49 Alaska-owned companies,
they account for 73 percent of the revenue earned, 66 percent of
Alaskan jobs, 84 percent of the worldwide employment, and make
up 22 of the top 49 Alaskan-owned companies. The ANCSA Regional
Corporations have grown into an economic engine of Alaska. Ms.
Reitmeier then related support for HB 149. As mentioned
earlier, there has been a marked trend amongst shareholders in
which there has been a decline in voter turnout. She noted that
while shares in Alaska Native corporations are limited in
nature, the shareholder base of these corporations are growing
through inheritance of shares and broadening eligibility
requirements. Trend analysis relate that respected elders are
always willing to turn out and vote, particularly those living
within the region. However, younger shareholders and those
living outside the state, the demographics for which are
growing, are less likely to turnout to vote. In response to the
aforementioned, Alaska Native Regional Corporations have
initiated voter turnout initiatives including shareholder
surveys and implemented incentives for voting. However,
increases in prizes have only resulted in incremental
improvements in voter turnout. This legislation provides the
opportunity to address what could become a problem before it
arises. The State of Alaska Corporation Code Section 10.06.415
sets the quorum requirements to hold an annual meeting for
Alaska Native corporations at 50 percent plus one of shares
eligible to vote. If an Alaska Native corporation fails to meet
the aforementioned quorum, business at an annual meeting can't
be conducted and directors can't be elected. Therefore, the
current directors would remain in place until an election can be
held. Under current law, a corporation's articles of
incorporation can be amended to lower quorum requirements.
However, current statute for corporations created prior to 1989,
which includes nearly all Alaska Native corporations, requires a
two-thirds vote of eligible shares in favor of the change. The
legislation, HB 149, before the committee amends the statute to
reduce the percentage of votes required to amend the articles of
incorporation of corporations established prior to 1989 to
change the quorum requirement. The articles of incorporation
change would be limited to a change in the quorum requirements
and no other change would be allowed under this statute change.
Ms. Reitmeier explained that HB 149 would allow a change in a
corporation's articles of incorporation, for those corporations
established prior to 1989, such that a majority of the quorum is
at least 50 percent plus one of the shares eligible to vote. In
closing, Ms. Reitmeier summarized that HB 149 changes the
standard for the number of votes required to consider changes to
a corporation's articles of incorporation, which would allow for
changes in quorum requirements. If the proposed HB 149 passes,
shareholders must still vote to amend the articles of
incorporation and shareholders must still vote to change the
quorum requirements. The ANCSA Regional Association membership
has reviewed the proposed change embodied in HB 149 and all 12
regional CEOs unanimously support HB 149 and letters in support
of HB 149 have been submitted to the sponsor.
9:29:43 AM
REPRESENTATIVE REINBOLD emphasized the importance of getting
younger people involved, but opined that she wasn't sure
lowering the quorum requirement is the answer. Representative
Reinbold clarified that she wouldn't oppose HB 149, but
maintained concern with the direction of HB 149 and reiterated
the need to involve young people. She then inquired as to
whether all other options, such as voting by proxy, have been
exhausted in an attempt to attract younger voters.
MS. REITMEIER assured Representative Reinbold that there have
been discussions regarding strategies of voter engagement at
various levels. In fact, the [ANCSA Regional Association] runs
the Get Out the Native Vote campaign. The proposal in HB 149 is
merely one avenue to address the issue.
9:31:17 AM
REPRESENTATIVE REINBOLD indicated the possibility of tying
corporate dividends to voting in order to increase youth
involvement.
REPRESENTATIVE PRUITT noted that he has examples of how Doyon,
Limited, has specifically tried to address the issue.
REPRESENTATIVE REINBOLD said she has that information and opined
that what Doyon, Limited, is doing isn't working.
9:32:38 AM
REPRESENTATIVE NAGEAK emphasized the need to understand the
population dynamics of rural Alaska villages and cities where
the population is very young. In fact, in some rural Alaska
villages and cities over 60 percent of the population is "young"
in comparison to his generation. Furthermore, the original
shareholders are dying off and their shares are being passed on
to others.
9:34:25 AM
VICE CHAIR SEATON referred to flow charts in the committee
packet. The flow chart for quorum requirements says that under
HB 149 the vote to change the quorum requirements for ANCSA
corporations would change from the existing majority of eligible
shareholders in person or by proxy to one-third of eligible
shareholders in person or by proxy. The flow chart for amending
articles of corporation, on the other hand, shows that under
HB 149 ANCSA corporations would move from the existing
requirement of two-thirds of eligible shareholders in person or
by proxy to the majority of eligible shareholders present.
MS. REITMEIER deferred to Mr. Schutt.
9:35:27 AM
AARON SCHUTT, Doyon, Limited, noting that he doesn't have the
flow charts, related that the intent [with HB 149] is to change
to a vote requirement of 50 percent plus one [of eligible
shareholders] in person or by proxy. He related that for the
last 20 years Doyon, Limited, has regularly experienced well
over 90 percent of the votes cast in corporate elections being
cast by proxy.
9:35:57 AM
VICE CHAIR SEATON requested that prior to the next meeting on
HB 149, the sponsor work out the differences between the flow
charts for the default provisions for quorum requirements versus
for the default provisions for amending the articles of
corporation.
9:36:40 AM
REPRESENTATIVE HUGHES questioned whether the flow chart entitled
"Default Provisions for Amending Articles of Corporation" would
be better if it reflected that the legislation is specifically
for amending the quorum of the articles of corporation. She
related her understanding that the legislation refers to the
majority of eligible shareholders present is only for making the
one change, [the quorum change].
REPRESENTATIVE PRUITT replied yes, and clarified that HB 149
specifically relates to changing the quorum requirements not
other aspects of the articles of corporation [for ANCSA
corporations]. An affirmative two-thirds vote would still be
required to change other pieces of the articles of corporation.
9:38:35 AM
REPRESENTATIVE HUGHES, referring to the flow chart entitled
"Default Provisions for Quorum Requirements," related her
understanding that HB 149 merely makes ANCSA corporations have
the same quorum requirements as other corporations, including
non-Native corporations, formed after 1989.
REPRESENTATIVE PRUITT answered yes.
9:39:19 AM
REPRESENTATIVE HUGHES surmised that there will continue to be
challenges going forward as the younger generation becomes more
mobile, regardless of whether he/she is from a village or an
urban area. Therefore, she opined that the [changing
demographics] may apply outside of Alaska Native corporations as
well.
REPRESENTATIVE PRUITT noted his agreement, pointing out that
voting trends illustrate the lack of engagement by youth or the
utilization of other means to vote. He highlighted that Alaska
Native youth have a unique opportunity/responsibility to be a
part of a corporation, which is an extra burden that most youth
don't have. Therefore, one can understand why a corporation
isn't the first thing on the mind of an Alaska Native youth.
However, as [the shareholders] age, they are likely to become
more engaged.
9:41:34 AM
REPRESENTATIVE HUGHES characterized the movement and travel of
her own children since high school as incredible compared to
herself.
9:41:59 AM
REPRESENTATIVE DRUMMOND inquired as to whether HB 149 applies
only to the Alaska Native Regional corporations or does it also
apply to the Alaska Native Village corporations as well.
REPRESENTATIVE PRUITT clarified that AS 10.06.960 specifically
relates to Alaska Native corporations, which includes both the
regional and village corporations.
9:43:23 AM
REPRESENTATIVE DRUMMOND related her understanding that Alaska
Native Village corporations are much smaller in terms of the
numbers of shareholders.
REPRESENTATIVE PRUITT responded yes, adding that some of the
smaller village corporations wouldn't be able to perform
marketing campaigns, such as that by Doyon, Limited, to
encourage attendance and participation.
9:44:12 AM
REPRESENTATIVE DRUMMOND asked if all 12 corporations of the
ANCSA Regional Association and AFN agree with the need for the
proposed change in the quorum requirements.
MS. REITMEIER replied yes, reiterating that the vote was
unanimously in support.
9:44:47 AM
REPRESENTATIVE HUGHES, referring to the flow chart entitled
"Default Provision for Quorum Requirements," asked whether any
non-Native corporations formed prior to 1989 would benefit from
this proposed quorum change in HB 149. If so, she asked whether
the proposed quorum change in HB 149 should be allowed for all
corporations formed prior to 1989.
REPRESENTATIVE PRUITT characterized extending the change
embodied in HB 149 to non-Native corporations as a policy
question. He noted that although he hasn't heard from such
corporations, he hasn't sought responses from non-Native
corporations formed prior to 1989. Therefore, he said he
couldn't speak to the ramifications of extending this to all
corporations formed prior to 1989 since he didn't know if they
face the same challenges as Alaska Native corporations formed
prior to 1989.
9:47:20 AM
REPRESENTATIVE HUGHES offered that she would be open to
expanding the legislation to non-Native corporations formed
prior to 1989, if they were interested in the option. She
inquired as to whether the sponsor would consider the
aforementioned.
REPRESENTATIVE PRUITT answered that he doesn't have an issue
with offering the same for non-Native corporations formed prior
to 1989. However, the legislation would need to be changed as
currently it amends statute that specifically relates to Alaska
Native corporations. Although Representative Pruitt felt it
would be acceptable to apply the proposed change to non-Native
corporations formed prior to 1989, he emphasized that Alaska
Native corporations have a unique challenge in which youth
automatically become shareholders, which is unlikely to be the
case in non-Native corporations formed prior to 1989.
9:49:08 AM
REPRESENTATIVE NAGEAK pointed out that there is a difference
between publicly owned corporations and regional corporations.
For instance, shares of publicly traded corporations are
different in that they are purchased rather than transferred as
is the case in regional Native corporations. He informed the
committee that in regional corporations those born after 1974
have 100 shares, but the original shareholders can transfer
their shares to others.
9:50:45 AM
REPRESENTATIVE HUGHES commented that she is of the mindset that
if the quorum requirements for non-Native corporations isn't
problematic, then it's not necessary to address it. She also
said she understood the unique situation of Alaska Native
corporations.
9:51:22 AM
VICE CHAIR SEATON remarked that expanding the proposal in HB 149
to corporations beyond Alaska Native corporations without input
would be difficult. Furthermore, including non-Native
corporations in HB 149 would require more time in terms of
obtaining agreement from all corporations throughout Alaska
whereas all Alaska Native corporation heads have unanimously
supported HB 149.
9:52:44 AM
REPRESENTATIVE DRUMMOND related her personal experience as the
president of a board of a homeowners' association that runs the
water delivery system in her neighborhood. That association has
the ability to change its own bylaws and articles of
corporation, as she was sure most corporations in Alaska have.
In fact, the association had to change its quorum requirements
last year because it was unable to obtain enough homeowners to
conduct business. Representative Drummond said she was fairly
confident that most non-Native corporations have the ability to
alter their own articles of incorporation and bylaws.
Therefore, she noted her agreement with Vice Chair Seaton that
the committee should just address HB 149 as it relates to Alaska
Native corporations.
9:54:14 AM
REPRESENTATIVE PRUITT offered to perform due diligence in terms
of reaching out to non-Native corporations established prior to
1989, although he surmised that they are totally different.
9:54:53 AM
VICE CHAIR SEATON reiterated his request for revised flow charts
for the next meeting on HB 149.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HCS HB 118 (ENE) Sectional Analysis.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HCS HB 118 (ENE) Hearing Request Letter.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HB0118B.PDF |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HB0118-1-2-021815-CED-N.PDF |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| 15 3 4_IGU Supports PACE Act.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HB 118, PACE HCRA 03 26 15.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HB 118, Supporting Document - Alaska Bankers Association.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| Mayor Eberhart CIty of Fairbanks.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| REAP Support PACE Financing, HB 118.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| Mayor Hopkins FNSB.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 118 |
| HB 149, Supporting Document - Flow Chart, Quorum Requirements.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 149 |
| HB 149 Sponsor Statement.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 149 |
| HB 149 Sectional Analysis.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 149 |
| HB149-DCCED-CBPL-03-20-15.pdf |
HCRA 3/26/2015 8:00:00 AM |
HB 149 |